Russia's accession to the global tax initiative will bring tens of billions a year into the Russian budget. Alexey Sazanov, State Secretary - Deputy Minister of Finance, spoke at length about this effect at the ‘New directions of tax regulation in the world today’ session of the Moscow Financial Forum.
Pascal Saint-Amans, Director of the OECD Centre for Tax Policy and Administration, Daniil Yegorov, Head of the Russian Federal Tax Service, Alexander Shokhin, President of RSPP, as well as tax consultants and representatives of the Russian business community also attended the discussion.
In his presentation, Pascal Saint-Amans pointed out that the international taxation system has become essential due to changes in the global economy, and a number of initiatives under Pillar 1 and Pillar 2 are being developed to establish it.
‘As for Pillar 1, we should allow countries to tax companies even when they are physically absent and to work out some kind of formula, for example, 20 to 30 percent. This rent will then be distributed between different jurisdictions where the clients are present. As for Pillar 2, MNCs place some of their profits in jurisdictions with little to no taxation. This is a kind of ‘a downward race’, and tax administrations, whether in Russia or other countries, should be protected from this race. That's why a global tax minimum of at least 15% is required,’ Pascal Saint-Amans said.
‘What is the point of the OECD proposals, especially Pillar 2? It is to create a new system of international tax neutrality. We as tax administrations believe neutrality exists where there is no choice. Neutrality means manipulating the system to attain a different tax status, a different tax base, a different taxable activity or asset, a different rate is out of question. This is something that makes life undeniably easier for the tax authorities,’ Daniil Yegorov, Head of the Federal Tax Service of Russia said.
In turn, Alexander Shokhin, President of the Russian Union of Industrialists and Entrepreneurs, emphasized that the interests of business should be accounted for in any tax changes.
‘Businesses really do not want the tax burden to increase, so when making tax innovations it is important to find the optimal solutions that maintain the stimulating function of taxes without harming the budget. It is important for national tax regulation not to overlap with international regulation, which could lead to double taxation,’ Shokhin said.
The panelists also discussed a carbon border tax promoted by the European Union. During his address, Alexey Sazanov noted that the business sector needed government support in adapting to the proposed innovations. ‘We should help our businesses adapt. This could be done using various tools: regulatory, budgetary, and tax,’ he said.
However, he stressed that he saw no point in subsidizing Russian exporters to cover the EU carbon tax. ‘As for helping our exporters, the Government just subsidizing them to cover the fees they pay to Europe doesn’t make sense. That doesn’t help achieve the goal of reducing the carbon footpring," he said.
Alexey Sazanov also emphasized that in order to achieve the goals of the Paris Agreement, it was essential to rely primarily on Russia's competitive advantages. ‘Maybe, we should be trading not emission certificates, but certificates for planting forests and growing algae to absorb greenhouse gases. We have a large territory, and this is our competitive advantage. We should use our country's competitive advantages to achieve the goals of the Paris Agreement,’ the Deputy Minister of Finance said.